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COMMERCIAL AVIATIONQ: When did the U.S. commercial aviation industry first become regulated?A: In 1926, Congress passed the Air Commerce Act prescribing that only U.S. citizens could register aircraft in the U.S., and foreign aircraft had to obtain permission to fly over U.S. territory. The Act also required that the President of a firm holding U.S.-registered aircraft had to be a U.S. citizen along with 2/3 of officers and members of boards of directors. Q: What was the motivation behind these regulations? A: During World War I, the government recognized a number of commercial industries that had significant strategic uses during wartime, and the U.S. Navy pushed for these regulations arguing that the U.S. should have a fleet of aircraft under its domestic control that could be used in the event of war to transport both personnel and material. Q: Are these regulations unique to the United States? A: No, a majority of the governments in developed countries have passed similar regulations, recognizing the fact that aircraft are very capable of ignoring traditional geographic boundaries and the military potential of aircraft to protect security interests. Q: Are modern regulations of the aviation industry still focused solely on national security interests? A: No, the Federal Aviation Act also includes safety regulations regarding airworthiness and certifications of pilots and people who service aircraft used by U.S. air carriers and commercial operators. Q: How would a foreigner participate as a direct air carrier in U.S. markets? A: Two basic methods:
A: Yes, recent changes in federal regulations have created new opportunities such as:
A: No, but they may participate in international service if they can achieve federal governmental approvals. Q: What types of barriers do foreign airlines face in gaining approval to provide international service to and from the U.S.? A: Foreign airlines attempting to provide international service will first be subject to bilateral air transport services agreements between the U.S. and other countries. Then, foreign airlines will have to obtain a permit from the Department of Transportation (DOT). Q: What are the statutory requirements for DOT permits? A: The foreign carrier must be fit, willing and able to perform the air transportation that it requests. The transportation the foreign carrier requests must also be contemplated by the bilateral air transport services agreement between the U.S. and its government, or it must otherwise be consistent with the public interest. Q: May foreign persons invest in U.S. air carriers? A: Yes, they may invest by purchasing shares or other securities that do not involve control, or by purchasing 25% or less of the voting stock of the carrier but will still be subject to DOT review. Q: Is the DOT more likely to liberalize its standards or create more restrictive standards regarding foreign investment in U.S. air carriers? A: Based on recent cases, it looks like the DOT will be more likely to liberalize its standards regarding foreign investment. Q: Has the U.S. made any significant agreements with other nations recently regarding air carriers? A: Yes, on April 30, 2007, the European Union (EU) Transport Council signed an Air Transport Agreement with the U.S. that will replace existing bilateral agreements and will, among other things, allow every U.S. carrier to fly to every city in the 27 EU member states and permit every EU carrier to fly to any city in the United States, without restriction on the number of flights, aircraft, and routes, and enter into code sharing and other alliances. | |